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Contact Information
Kyle Kincaid, CPA, CGMA
Office and Mailing:
3212 NW Byron St., Suite 110
Silverdale, WA 98383
Phone: 360-328-2074
Fax: 360-824-7139
Email:
Website: www.kylekincaid.com
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Hours: Monday-Saturday, schedule is by appointment only. Call 360-328-2074.
Map and driving directions:
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Do you operate as an S-corporation?
One of the most common problems I see is how owners are paying themselves in an S-corp. Sometimes these problems were created or made worse by their tax preparers, and expose owners to unnecessary future liability. Shareholder/officers who are active in the business should receive a salary. The IRS has won a number of court decisions where salaries have been imputed to officers who received none or an inadequate compensation for services performed. And they are targeting S-corporations for more audits in this area. But how much salary should you pay? The first consideration is that it should be a reasonable amount. For example, Fred is the sole shareholder of Madison Inc. Fred works at the business full-time, has an MBA and is a CPA. Before Fred's salary, Madison, a service business, had profits of $350,000. Fred takes a salary of just $25,000 per year. Clearly, in the absence of other factors, that's far too low. Significant distributions to the shareholder (including the payment of personal expenses), and little need to retain capital in the business, would weigh against the corporation. You don't want an audit just because of a clearly inadequate salary.
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